Tag Archives: broadband adoption

Broadband consortium facing false reporting, contempt charges skids into CPUC hearing

by Steve Blum • , , ,

For more than five years, the California Public Utilities Commission has wrangled with a consortium of five Los Angeles community organisations over a $450,000 grant that was supposed to be used to produce particular broadband education programs. Three of those groups were exonerated in tentative settlements reached with CPUC enforcement staff. Another agreed to pay a fine. But the fifth – Community Union – is contesting accusations of, among other things, “false claims”, “false reports”, “inadequate and incomplete” record keeping, and “adamantly” refusing to provide documentation to CPUC staff and to auditors from the state controller’s office.

Four days of hearings are scheduled to begin next week. That alone tells how messy the proceeding is: the CPUC’s review of the federal deals that allowed the multi-billion dollar T-Mobile/Sprint merger and the asset spinoff to DISH only required two days of hearings.

CPUC enforcement staff will have to show that the consortium – known as “California’s One Million New Internet Users Coalition” or NIU Coalition for short – was reimbursed for activities and expenses that didn’t happen as described or promised, and/or weren’t properly documented. They’re pushing for the NIU Coalition to “return at least $197,764 in improperly collected grant funds”.

Community Union would be responsible for repaying most – likely, all – of that amount. On top of that Community Union and its president, Larry Ortega, could be fined for their conduct.

Community Union’s defence tactics resulted in additional complaints against it and Ortega. In an unusual step, the commissioner overseeing the proceeding, Clifford Rechtschaffen, added contempt and violations of CPUC procedural rules to the list of issues that the investigation is supposed to resolve.

“Since the initiation of the…proceeding Mr. Ortega, president of Community Union, has exhibited uncooperative behaviors that have frequently disrupted the investigation. These behaviors have continued throughout the proceeding and are consistent with the actions described in the [order instituting investigation]”, Rechtschaffen wrote. “Mr. Ortega and Community Union have continually engaged in uncooperative behavior throughout the proceeding, hindering efficient administration of justice”.

One member of the NIU Coalition, Korean Churches for Community Development (KCCD), agreed to pay a $15,000 fine for its failings in its role as the “fiscal agent” – money manager – of the consortium, which was funded through the CPUC’s California Advanced Services Fund regional broadband consortia program in the first round of grants in 2012. If approved by commissioners, it appears that the settlement will wash away $47,000 in disputed reimbursements for KCCD’s administrative costs.

KCCD was otherwise absolved by the investigation. CPUC enforcement staff agreed that it maintained its bookkeeping as best it could, given that Ortega “refused to provide KCCD with access to financial and other business records”, and that it properly “carried out its own technology training separate and apart from the training led by Mr. Ortega on behalf of the NIU Coalition”.

Although KCCD was nominally the fiscal agent, “authority for making program-related operational and budget decisions is concentrated solely with one person, the NIU Coalition’s co-founder”, according to state auditors. Ortega is that co-founder.

Two groups – the Black Business Association and the Soledad Enrichment Action – Charter Schools – will be “dismissed” from the proceeding, assuming the CPUC gives final approval to all the settlements. Neither group “received CASF grant funds or were involved in CASF grant related activities”, according to their settlement documents.

The Asian Pacific Community Fund will likewise be dropped from the investigation. It completed its initial work for the consortium, and properly accounted for its expenses, before deciding “that it would terminate its membership in the NIU Coalition due to difficulties in working with Community Union”, according to its settlement documents.

That leaves Ortega and Community Union to respond to allegations that 1. digital literacy training and other tasks were not completed in a way that matches the terms of the NIU Coalition’s CASF consortium grant, 2. that the reports it filed with the CPUC are inconsistent with those activities, and 3. that it didn’t comply with CPUC financial requirements, including accounting standards and allowable expense rules.

CPUC enforcement and CASF management staff submitted hundreds of pages of documents and statements to back up their assertions. For example, they say…

  • Hours of training performed didn’t match up with Community Union’s obligations or with quarterly reports submitted to CASF staff.
  • “The coalition failed to schedule classes until [CASF staff] notified them of an upcoming site visit”.
  • “Questionable expenses” – including dentist bills, a fitness club payment and a bar tab – were identified, although perhaps not reimbursed by the CASF consortia grant.
  • Community Union’s financial records did not come close to meeting accounting standards. It finally gave state auditors “what appears to be another check register” but “no documents, accounting records, or source documents were made available to authenticate the check register recorded transactions”.

Ortega’s first and often repeated line of defence is to insist “liability related to administrative, financial and legal has been assumed by the fiscal agent”, so any disputes the CPUC has with the NIU Coalition are KCCD’s responsibility and not Community Union’s.

The administrative law judge managing the case, Zhen Zhang, has consistently rebuffed that claim. “The fiscal agent has responsibilities set forth in the fiscal agent agreement”, she said at one point. “But the fiscal agent’s responsibilities do not relieve any member organisations performing what was promised in the work plan”.

In a pre-hearing brief, Ortega set out his formal defence, arguing that CPUC staff isn’t qualified to evaluate discrepancies in hours of training done versus hours promised and reported, and that state auditors misread the revenue and expense numbers Community Union provided, which was a fraction of the data they requested.

Otherwise, Ortega’s defence veers sharply away from the core questions under investigation. His motions, responses and declarations include accusations of racism and persecution, demands for payment of $80,000 withheld by the CPUC, a claim that he’s generated $600,000 in publicity for the CPUC, objections to Rechtschaffen’s participation, and complaints about the attitude, competence and gravitas (rather, lack thereof) of CPUC staff, state auditors and others, including this Humble Blogger.

The drama still has months to run. Years, if appeals drag on. This kind of proceeding is supposed to be wrapped up in 18 months. The commission voted to extend the investigation twice, most recently at its 6 August 2020 meeting. In making the request for a second extension – to next March – Rechtschaffen briefly described the case and its trajectory. The only comment came from CPUC president Marybel Batjer.

“Wow”, she said.

Links to documents I’ve collected regarding the NIU investigation are here. Some key documents are below:

CPUC Consumer Protection and Enforcement Division’s Prehearing Brief


17 Aug 2020

Consumer Union’s Prehearing Brief


18 Aug 2020

Ruling by commissioner Clifford Rechtschaffen expanding the scope of the proceeding to include contempt and rule violations by Larry Ortega and Community Union


10 Jul 2020

Initial proceeding scope, issued by Rechtschaffen


18 Dec 2018

CPUC order instituting investigation of the NIU Coalition


12 Jul 2018

Community Union motion, laying out grievances and asking for more time


24 Jul 2020

Settlement of the fiscal agent, Korean Churches for Community Development, and CPUC enforcement staff


2 Apr 2020

Settlement of the Asian Pacific Community Fund and CPUC enforcement staff


1 Apr 2020

Settlement of Black Business Association, Soledad Enrichment Action- Charter Schools and CPUC enforcement staff


1 May 2020

Community Union motion opposing KCCD settlement


12 May 2020

KCCD and CPUC enforcement staff reply to Community Union’s opposition


22 May 2020

Investigation of California’s One Million New Internet Users Coalition & Korean Churches for Community Development, CPUC staff report


1 May 2018

Staff report exhibits (49 MB)


1 May 2018

California’s One Million New Internet Users Coalition, Audit Report, Consortia Program, California State Controller


9 Nov 2015

Correction: The T-Mobile/Sprint proceeding took a total of six days of evidentiary hearings (four in February 2019 and two in November 2019), not two as I previously said. Thank you to a Gentle Reader for the correction. The text above is updated to reflect that.

I do a lot of work for regional consortia, some of it paid, some of it not. I’m proud of what I do, but not of some of the other crap that goes on. I am not a disinterested commentator. I am flippant and stroppy, and lack gravitas. (But face it, the last Californian endowed with gravitas was Warren Christopher). Take it for what it’s worth.

In a first, Gonzales, California provides free, city-funded Internet service to every home, with unique two year T-Mobile deal

by Steve Blum • , , , ,

Gonzales logo 625

Every household in Gonzales, California can get free Internet access, courtesy of the City of Gonzales. So can families that live outside the city limits that have students attending school there. So far, more than 1,200 households of the approximately 2,000 households in and around Gonzales have taken up the offer. Gonzales students can get online and use school district-provided Chromebooks to keep up with their lessons, despite being locked down during the covid–19 emergency.

As the crisis came to a head in March, the City accelerated distribution of T-Mobile hotspots to residents who needed or wanted broadband connectivity. In 2019, the Gonzales City Council approved an agreement with T-Mobile to buy up to 2,000 hotspots with unlimited Internet access (with the usual caveats about slowing down heavy users).

Posted by City of Gonzales, California on Friday, 20 March 2020

That deal has the City paying $12.50 per month for 24 months, for each activated hotspot. It’s a modification of a standard T-Mobile offer to schools, and includes the Gonzales Unified School District as a partner. It was negotiated after the City issued a request for qualifications in 2017. The goal, which has been largely achieved, is to provide baseline, City-funded Internet service to every home that wants it.

According to the staff report presented to the Gonzales City Council…

The T-Mobile Network in the City of Gonzales is one of the densest (3 cellular towers with 700Mhz, 1900Mhz, 2100Mhz and shortly to be released 600Mhz, covering 8,000 individuals), and underutilized network in Northern California. The Agreement requires that T-Mobile provide its best effort in delivering Wireless Internet Services well above the FCC’s Advanced Wireless Service standard of 25 Mbps Down/ 3Mbps Up.

Residents have other options. AT&T offers variable DSL service in Gonzales. After the City challenged Charter Communications in a California Public Utilities Commission proceeding in 2015, the ancient analog cable system in Gonzales was upgraded to digital capability and now supports broadband service as well.

Initial comments from families that are using the City-subsidised hotspots indicate that T-Mobile’s performance is better than AT&T can deliver, but not as good as Charter’s cable modem service. Residents had no particular problems using the hotspots and connecting to online resources and services. Any questions were handled either on an informal basis by City or school district staff, or via T-Mobile’s bilingual customer support line.

The City of Gonzales is one of my clients and I assist with the City’s broadband initiatives, including the negotiations with T-Mobile. I am not a disinterested commentator. Take it for what it’s worth.

Two-thirds of California families say they need help getting their kids online

by Steve Blum • , , , ,

Jet school bus2

Some California students have access to the tools they need to keep up with lessons while locked down at home, but many, particularly those in low income households, don’t. That’s the finding of a survey of California parents conducted by the Education Trust West (h/t to Scott Lay at Around the Capitol for the pointer).

Kids don’t have the computers or tablets to do the word, and those who do can’t connect. Respondents said there are too few devices available in the home, only about third said that schools are providing take-home equipment to their kids. But connectivity is a major roadblock…

Lack of reliable internet access is another top barrier for families who feel less than confident that they will be able to participate in distance learning (29%). This issue is particularly common for families in the North of the state (47%), low-income families (38%), Hispanics in the Los Angeles suburbs (35%) and families located in the Los Angeles suburbs in general (34%). Two-thirds of parents (67%) say providing free internet access to families while schools are closed due to coronavirus would be very helpful for families like theirs, yet only 20% of parents report that their school district has made this available for students.

Some help is already supposed to be on the way, and more is in the pipeline. Google promised to donate 4,000 Chromebooks and 100,000 mobile network-enabled WiFi hotspots to California schools. The California department of education has the job of distributing such resources to the schools that need them the most, and has been surveying school districts and county education office to try to sort that out.

Another $5 million from the California Advanced Services Fund could be on the way next month. The California Public Utilities Commission is scheduled to vote on a proposal to, in effect, transfer the money to CDE to likewise be used to buy hotspots and Chromebook-class laptops, or similar devices.

CPUC antes up $5 million for student hotspots and laptops, but the pot’s not right yet

by Steve Blum • , , , ,

A plan to spend $5 million on mobile hotspots and inexpensive Chromebook-class laptops, for students to use at home while schools are shut down during the covid–19 emergency, is set for a 7 May 2020 vote by the California Public Utilities Commission. Comments on the draft resolution are due 27 April 2020.

The California Department of Education (CDE) would manage the money and target schools that have the greatest need.

The draft resolution and the original request from CDE are a bit vague on the definition of a hotspot. But connecting all the dots in the two documents draws a picture of mobile network-enabled WiFi devices, and not the amenity-grade public WiFi access points touted by the lobbying front organisation that represents Comcast, Charter Communications and other cable companies in Sacramento.

The money would specifically come from money in the California Advanced Services Fund that’s earmarked for digital literacy and subscription sales – AKA “adoption” – programs…

Only the costs of acquiring computing devices and deploying hotspot devices are allowable expenses. The Commission anticipates that the costs per computing device will not be more than $300 per device. The cost per hotspot device has not been determined but the Commission assumes that costs incurred will be reasonable.

The draft resolution leaves a big grey area for commission staff and CDE to navigate. As it points out, “the adoption account does not allow subsidising the costs of providing broadband service to households”. That restriction is baked into California law, courtesy of lobbyists for cable and telephone companies, and their non-profit helpmates, who didn’t want to create a potential revenue source for competitors but did want a $20 million slush fund to supplement their marketing budgets.

Distributing mobile hotspot hardware is one thing. Lighting it up is another. Purchasing a hotspot that comes with, say, a year’s free service might be a way around that restriction, assuming cable and telephone companies don’t use scorched earth tactics to defend their monopoly model lock on low income communities, as Charter has repeatedly done.

T-Mobile, for example, offers schools hotspots with unlimited service (with the usual caveats about slowing down heavy users) for a net $324 for 12 months and $364 for 24 months, assuming a hardware cost of $84.

On an egregiously rounded, back-of-the-envelope basis, $5 million will buy 12 months of connectivity for 15,000 households or 24 months for 14,000 households at those prices. Or $300 laptops for 17,000 homes. Or both for something like 8,000 homes. Bulk buys can bring costs down and $300 is high end for a Chromebook but, even so, it’s all in the same ballpark.

CDE also has an offer from Google to provide 100,000 hotspots and 4,000 Chromebooks. If there’s cash in that deal, and not just merchandise, it could help solve the millions for marketing but not a dime for service problem, as well as increase the number of homes reached.

In its request to the CPUC, CDE said that 188,000 California students lack Internet access at home and 203,000 don’t have a device that will allow them “to participate in a digital distance learning experience”. Assuming two students per household, $5 million will only fill something like 10% of the gap, and combining it with Google’s contribution would extend that to maybe as much as a quarter of the shortfall.

It’s a good start. Now we have to figure out how to get to the finish.

Fabricated sales forecasts are a bad basis for handing out broadband “adoption” grants

by Steve Blum • , ,

The California Public Utilities Commission launched a new, $20 million taxpayer-funded broadband “adoption” program last year. It was included in the $330 million gift to Frontier and AT&T (and Comcast and Charter and…) that the California legislature approved in 2017. The CPUC isn’t setting a quantitative adoption target, and is simply acknowledging that “the number of subscriptions to broadband service has been growing annually in California and adoption will inevitably increase”. Instead, the program is built around digital literacy training, and free Internet access points and equipment.

The CPUC went through one round of adoption grant proposals this past summer. Changes to the program are proposed, based on lessons learned.

Even so, organisations still have to forecast the “number of new residential broadband subscriptions resulting from the project” in their grant applications and provide “a summary of subscriptions resulting from the project” in order to collect their money. That’s driven by the legislature – assembly bill 1665 requires the CPUC to report back on “the number of subscriptions resulting from the broadband adoption program” that’s paid for by the California Advanced Services Fund (CASF). The CPUC will look at other ways to measure broadband uptake, but demonstrating a causal link between that rising tide and CASF dollars is impossible.

The implication is that the more new subscribers an applicant forecasts, the better the chances of getting money, even though the CPUC’s guidelines don’t say that. At best, that approach will produce unobtainable estimates, at worst it’ll lead to fraud.

To make the program work, the CPUC should focus on credibility and reject applicants who give in to temptation and offer inflated sales projections. Instead, priority should go to applicants who are honest about their mission and have a verifiable track record of producing results based on the accepted criteria of their professions. A non-profit or government organisation that promotes its worthiness or measures its success on the basis of sales that have to be closed by others – by for-profit Internet service providers – should be viewed with skepticism, to put it politely.

Don’t confuse social services groups with ISP sales departments

by Steve Blum • , ,

It’s been a bad few weeks for so called broadband adoption programs in California. First, the shotgun marriage between Frontier Communications and the California Emerging Technology Fund (CETF) turned into a messy divorce, having only reached a tiny fraction of its “aspirational” target of 200,000 new broadband subscribers.

Then the California Public Utilities Commission launched an effort to recover $244,000 from a Los Angeles County adoption program, that was funded by a regional broadband consortia grant from the California Advanced Services Fund. That program had an even loftier goal: it was called California’s One Million New Internet User Coalition (NIU Coalition). A CPUC investigation resulted in allegations of “false reports” submitted by the group, regarding time spent – and billed – training residents of low income communities in the mysteries of the digital world.

These programs are intended to get more people to use Internet-delivered services and subscribe to broadband service. In theory, that’s what “adoption” means. It’s a marketing metric that’s expressed as the percentage of potential customers who buy a particular category of product or service. To increase the adoption rate, you need to close more sales. Period.

The problem is that the non-profit corporations and community based organisations that chase “adoption” grants are not well equipped to meet Internet subscriber sales quotas. Instead, they tend to focus on advocacy or education – digital literacy, as it’s sometimes called. Or they simply give computers and Internet access away. That might be worthy thing, but at best it’s an indirect way to drive broadband subscriptions.

Computer giveaways, free Internet access and digital literacy classes are not sales tools. Those sorts of programs play a role in connecting more people to Internet-delivered services and closing the digital divide. But you can’t measure their success by the number of new subscriptions they generate. Trying to do that just leads to acrimony when ridiculous targets aren’t met. There are better ways to hold educational and social services organisations accountable than by pretending they are the sales department for Internet service providers.

Broadband consortium accused of making “false reports”, CPUC wants $244,000 back

by Steve Blum • , , ,

The California Public Utilities Commission began funding regional broadband development groups, AKA broadband consortia, in 2011. In rural areas, and some urban areas, the groups primarily worked on expanding broadband infrastructure. But in Los Angeles County, the focus was on broadband promotion – AKA broadband “adoption” – programs that aimed at getting more people to use – and subscribe to – Internet service.

One of those groups styled itself “California’s One Million New Internet User Coalition”. It received conditional approval for a $450,000 grant from the CPUC and paid for by the California Advanced Services Fund (CASF), to run digital literacy training, primarily in low income communities in LA County. An organisation called Korean Churches for Community Development was in charge of the money – AKA, the fiscal agent – and, according to CPUC records, the consortium’s leader was Larry Ortega, CEO of Community Union Inc.

The CPUC doesn’t simply write checks, however. The CASF program generally reimburses grant recipients, including consortia, for money that is spent on approved activities, and properly documented. The NIU Coalition, as it’s sometimes called, made claims about millions of people reached that might have true – one news story on an LA television station gets a lot of eyeballs. But the training programs that the CPUC was paying for were a different matter. According to a report by CPUC enforcement staff, what the consortium actually did, didn’t match the reimbursement claims that it submitted…

The Coalition repeatedly made false claims to the Commission by reporting
that they provided 40 hours of instruction despite reducing instructions to 20
hours…the Coalition “gave the impression that the Consortium has been offering the 40-hour in-class training in all its quarterly reports and in its requests for Year 2 and Year 3 budgets.” The Coalition’s application and subsequent annual work plan submissions to the Commission all falsely claimed that they were still providing 40-hour training programs. The Coalition misled the Commission by making false reports.

The CPUC will vote next month whether to begin the formal process of clawing back $244,000 from KCCD, and possibly assessing fines and other penalties on it and Ortega. According to the CPUC, Ortega and KCCD have stonewalled them, and largely refused to respond to questions or demands to return the money.

I do a lot of work for regional consortia, some of it paid, some of it not. I’m proud of what I do, but not of some of the other crap that goes on. I’m not a disinterested commentator. Take it for what it’s worth.

California broadband adoption rate flat for 5 years

by Steve Blum • , ,

The in-home broadband subscription rate in California is the same now as it was five years ago, and the cost of service is the biggest barrier to adoption. That’s the top line result from an annual survey commissioned by the California Emerging Technology Fund. This year, the research was carried out by U.C. Berkeley’s Institute of Governmental Studies. It found that in 2017, 69% of Californian households are connected to the Internet via a “computing device”, which is the same rate as in 2013.

Another 18% of Californian households get Internet access “through a smart phone only”. That figure has gone up over the five years: in 2013, it was 6%.

Age, income and ethnicity matter. Homes surveyed where the “householder” is younger than 30 years old are well above the 69% average, with 78% reporting broadband access. On the other hand, Internet connectivity drops off sharply past age 65 – 60% for everyone 65 and older, and just 49% at 75 and older.

White households have a broadband take rate of 83%, which compares to Asian American and African American households at 64% and 63% respectively, and to Latino households, which have an overall adoption rate of 54% and just a 32% rate among Spanish speakers. Latinos are also far more likely to be limited to smart phone access only.

There’s a clear household income trend too – 48% of household where income levels are less than $20,000 a year have in-home broadband access, compared to 90% of households with income at $100,000 or more. Reliance on smart phones is likewise linked to income, with 27% of households with income of less than $20,000 relying solely on mobile service. That figure drops to 9% in homes where income is at $100,000 or more.

Price is the major reason people do not have broadband service in their homes. Of the Californians who don’t have connectivity, 69% cite cost as a factor and 34% say it’s the main reason. No other factor comes close. Only 12% say it’s because of technical difficulties or a lack of knowledge. That’s in line with other studies that point to service and equipment costs as the primary barrier to broadband adoption.

A smartphone is a poor, and the poor’s, choice for broadband

by Steve Blum • , , ,

If a smartphone was the killer Internet access solution that AT&T claims it is – usually when trying to divert attention from substandard or even non-existent wireline service in rural and inner city communities – then you’d expect to see something like an even spread of usage cases across demographic groups.

The Pew Foundation’s latest research shows that is clearly not the case.

Overall, 12% of U.S. adults own a smartphone, but do not otherwise use the Internet at home. A deeper dive into those numbers indicates, though, it’s not a matter of style or choice. Only 5% of high earners rely solely on a smartphone, while 21% of those in the lowest income bracket – less than $30,000 a year – do.

The gap is even bigger when education is factored in. Again, 5% of highly educated adults are smartphone-only, versus 27% of those without a high school diploma.

There is also stratification by age and race. Blacks (15%) are more likely than whites (9%) to be smartphone reliant, and latinos even more so (23%). Pew didn’t provide cross tabs, but I’ll speculate that if the numbers were broken out by income and education levels, those would be the significant factors.

The age spread is less, but still significant. Adults under 30 years old come in at 17%, while 7% of those 65 and up are in the smartphone-only category. Again, income and education levels are likely more determinative, but the basic gating question – does a person use the Internet or not? – is probably the main explanation for the gap. There’s a big age divide between those two age groups when it comes to Internet adoption – at home or on a smartphone – 99% versus 64%.

There’s no gender difference in smartphone-only rates – men and women are both at the overall average of 12%. There’s also no significant difference between urban and suburban (both 12%) and rural (14%) areas, although differences in availability were not factored into Pew’s numbers.

Some U.S. adults probably do rely solely on smartphones as a matter of choice, but the income and education gaps indicate that necessity – a simple lack of economic choice – is the real driver.

U.S. Internet use up, but age, income, education matter

by Steve Blum • ,

More people in the U.S. have broadband service at home than ever before, according to the latest numbers released by the Pew Foundation. After a couple of years where residential adoption dipped, it’s on the way back up, albeit unevenly…

Between 2013 and 2015, the share of Americans with home broadband service decreased slightly – from 70% to 67%. But in the past year, broadband adoption rates have returned to an upward trajectory. As of November 2016, nearly three-quarters (73%) of Americans indicate that they have broadband service at home. But although broadband adoption has increased to its highest level since the Center began tracking this topic in early 2000, not all Americans have shared in these gains. For instance, those who have not graduated from high school are nearly three times less likely than college graduates to have home broadband service (34% vs. 91%). Broadband adoption also varies by factors such as age, household income, geographic location and racial and ethnic background.

Overall, a record 88% of U.S. adults make use of the Internet, either at home or elsewhere. Again, that use is not evenly distributed throughout the population. Pretty much all adults younger than 30 years old – 99% – are connected, but less than two-thirds as many – 64% – of people 65 and older go online.

Income and education matter – there’s a clear drop from the 98% usage level among the highest earning and best educated adults to the 79% adoption rate among those in the lowest income category and 68% among the least educated. Where people live matters, too – urban and suburban residents are right around 90% mark, but rural Internet use is significantly lower at 81%.

On the other hand, race and gender don’t seem to be a factor according to the Pew study, at least from a top level analysis perspective. Men and women, and whites, blacks and latinos are within 3% of each other – all in the mid to high 80% range.